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O2 looks to iPhone to maintain growth

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O2 expects the launch of broadband and Apple's iPhone to maintain its momentum during the second half of the year, after it outperformed the market over the past three months.

O2 refused to confirm that it has won the right to sell Apple's music-oriented handset exclusively in the UK, despite evidence appearing in source code on Carphone Warehouse's website.

Peter Erskine, chief executive of O2, said: "We're excited about this product and we certainly hope to be marketing it later in the year when it launches."

The launch of the iPhone follows the opening of the O2 Arena, a music and sports venue built around the Millennium Dome structure in London. Mr Erskine said O2 has already seen its brand awareness increase, and around 150,000 of its customers have already visited the arena.

He said the company could delay the launch of its broadband service in the UK slightly until early October as it continues to introduce its network. He dismissed concerns that the company has waited too long to launch high-speed internet, arguing that O2 has a customer base of nearly 18 million to target.

O2 is the UK's largest mobile phone operator, and grew its sales by over 10 per cent in the three months to June. The mobile phone company, which was bought by Spain's Telefonica early in 2006, also increased its margins by focusing on moving more of its pre-pay customers onto contracts. O2 added 76,000 new contract customers over the period, and also reduced the rate at which users defected to its rivals.

Mr Erskine said the company is looking to trim some jobs in the UK over the second half, although it is understood that less than 100 jobs will go. However O2 will exit the year with around 1,000 more staff than at the end of last year, after opening a new call centre in Glasgow. The move follows 700 job cuts at O2's German unit as the company continues to struggle there amid tough market conditions.

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